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$1.9 trillion COVID-19 relief bill may unleash households on the stock market: Goldman Sachs

Yahoo FInance’s Myles Udland, Brian Sozzi, and Julie Hyman discuss what the Covid relief bill means for the stock market.

Video Transcript

MYLES UDLAND: All right, we'll go back to Yahoo Finance Live. The house set to pass the $1.9 trillion stimulus plan that the Senate approved over the weekend. Brian Sozzi, that would send checks to Americans. That's going to see additional PPE funding roll out. That's going to see unemployment benefits continue, and I know Goldman Sachs is now looking at how all of that could feed into the stock market.

BRIAN SOZZI: Yeah, Goldman, Goldman's Chief US Equity Strategist David Kostin, Myles and Julie, saying that a good chunk of stimulus money may actually find its way into the stock market. They're saying this year could see their household equity demand forecast for this year, they raised it to $350 billion from $100 billion previously, and a large part of that they are raising because of the new stimulus plan.

Worth noting here, inflows into equity mutual funds and ETFs now at $163 billion since February, according to Goldman, and that is interesting considering the pressure we have seen in many parts of the markets, notably tech, parts of the market where households tend to gravitate to, those big tech, those big momentum stocks and companies that a lot of households think that if they put money to work in them, they can get rich overnight, but nonetheless, like Rick Newman was noting in a prior segment, too, this is real money.

A family of four could haul in $5,600 here under this new stimulus plan, and some of that money very well could find its way into the market. Not all of it. I mean, I don't think you're dumping your whole $5,600 stimulus check into stocks, into GameStop and in Apple, but a portion of it could go a long way to driving further stock price increases, Myles.

MYLES UDLAND: Yeah, you know, we've seen a lot of different work on this, Julie. Last month, Deutsche Bank was out with a survey indicating, forget what it was. It was more than half of people who are in the market newly said they would remain in the market. These things are always cyclical. I guess I'm curious just to see how durable this trend is going to be with new retail participation. Everything's fun in a bull market. Everybody knows that, but does a flat market for three months, is that enough to throw people off the scent here?

JULIE HYMAN: Well, what's particularly interesting about that survey that you're talking about, and it was 50%, but it was young people in particular. 25 to 34-year-olds plan to spend 50% of their stimulus payments on stocks. Again, this is according to a survey from Deutsche Banks.

18 to 24-year-olds plan to use 40% of any stimulus checks on stocks, and the number actually got smaller the older you got. 35 to 54-year-olds plan to use 37% of it on stocks, so that implies that there's at least some degree of staying power, right, Myles, because if you're younger and you're starting now to put that some of that stimulus money in stocks, you know, unless you liquidate your entire position and then you're done with stocks forever, that would imply that that sort of educational opportunity, as well as maybe investment and money making opportunity would lead you to then remain in the market in some way and get some comfort with investing, so we'll see if that's indeed what ends up happening.

MYLES UDLAND: Yeah, I think there's going to always be a perpetual dance between this desire to get rich quick, which I don't think any of us would deny as a core American thesis, right, for sort of how you live in the world, but also, it doesn't take all that much effort to learn pretty good information about how you build wealth in the stock market, and that requires a lot of time.

And I think people know that lesson as well, and so to that point, Julie, I would anticipate, I think highly of my peers in the millennial generation that they would see this through, even if it's not all fun and games all the time. You want to have fun, you can go do some NFTs. You go talk about Top Shot, do all whatever Gary V was telling us about a couple of weeks ago. Good old fashioned Vanguard S&P, three basis point index fund, Julie, that'll work over the long term.